The Norris Group Hard Money shares the latest headlines in the investing, Realtor, lender, builder, and mortgage industries every weekday. We then collect the news and share the top headlines via our videos every Friday.

Tuesday, December 30, 2008

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 19, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 1245.4, an increase of 48.0 percent on a seasonally adjusted basis from 841.4 one week earlier. On an unadjusted basis, the Index increased 50.2 percent compared with the previous week and was up 124.6 percent compared with the same week one year earlier."

"That grim assessment underscored numbers released Tuesday showing that home prices in 20 metropolitan areas across the country dropped at a record rate of 18 percent in October from a year earlier as the fallout from the financial collapse reverberated through the housing market. According to the measure, the Standard & Poor’s/Case Shiller Home Price Index, all 20 cities surveyed reported one-year price declines in October. Prices in 14 of the 20 metropolitan areas fell at a record rate."

"Since late August, the Fed has expanded its balance sheet from about $900 billion to more than $2.2 trillion, creating $1.3 trillion that did not exist to replace some of the trillions wiped out by falling house prices and vengeful stock markets. The Fed has taken troublesome assets off the hands of banks and simply credited them with having reserves they previously lacked. In the case of the Treasury, the money comes from the same wellspring that has been financing American debt for decades: Investors in the United States and around the world — not least, the central banks of China, Japan and Saudi Arabia, which have parked national savings in the safety of American government bonds."

"The county's median price fell to $382,590 last month, down 38.6 percent from $623,510 the previous year, according to CAR. The median, the point where half the homes sold for more and half for less, fell 10.5 percent from $427,650 in October."

"Attempts to loosen terms on hundreds of thousands of delinquent home loans may be hindered by so- called piggyback second mortgages that gained popularity during the U.S. housing boom, Federal Reserve researchers said."

The Norris Group is taking a slight break for the holiday. We'll back in full force starting at the beginning of 2009! Thanks for reading and we look forward to seeing you then. Radio shows will continue to be posted during the holiday break.

Tuesday, December 23, 2008

"Policymakers are looking to revamp the nation's home loan system next year after the collapse of U.S. housing and mortgage markets spurred the current economic crisis. Under one possible approach, Fannie Mae and Freddie Mac, the federally run companies that control half of the nation's $11 trillion mortgage market, would disappear, leaving lending primarily to private banks. Taxpayers would no longer be on the line for subsidizing home loans. But analysts say it could become much harder to get a mortgage -- at least one with a relatively low interest rate and a 30-year term."

"Mortgage holders with cash from a bonus have a few days left to decide whether to make December the 13th month of the year. Making a January mortgage payment in December for extra tax savings or applying a lump-sum payment to a mortgage balance may make better use of the money than investing in the stock market this year. The Standard & Poor’s 500 Index is down 40 percent year to date."

"Some of the biggest U.S. property developers are asking for government money in the face of $160 billion in maturing commercial mortgages next year, the Wall Street Journal reported Monday. About $530 billion in commercial mortgages are due for refinancing over the next three years, with $160 billion due for payment next year, according to Foresight Analytics, the Journal reported."

"The National Association of Mortgage Brokers is going to court to block implementation of changes to the Real Estate Settlement Procedures Act (RESPA), saying the Department of Housing and Urban Development failed to assess the impact on small businesses."

"According to statistics compiled by the Construction Industry Research Board, just 4,544 permits were pulled throughout California during the month of November, down 17 percent when compared to the same month a year ago and up 8 percent from October due to a large increase in multifamily permits in Southern California. On a seasonally adjusted basis, the annual rate of production for single-family homes was just 23,300, the lowest on record."

"Existing-home sales – including single-family, townhomes, iniums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate¹ of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007."

"The number of mortgage default notices filed against California homeowners fell last quarter for the first time in three years as a change in the state's formal foreclosure process took effect. If that procedural change hadn't kicked in during early September, indications are that third-quarter default filings would have been about the same as the record number filed in this year's second quarter, a real estate information service reported."

"The Office of Thrift Supervision allowed IndyMac Bank to record $18 million of a $50 million infusion from its holding company on May 9 as first-quarter capital, Eric M. Thorson, the Treasury Department’s inspector general, wrote yesterday in a letter to U.S. Senator Charles Grassley of Iowa, the top Republican on the Senate Finance Committee. IndyMac was closed by the OTS on July 11 after a run on deposits depleted its cash."

"The accountant who predicted the nation’s largest municipal bankruptcy says as many as 10 insolvencies will roil the $2.7 trillion U.S. market for state, county and city debt next year as public finances worsen amid calls for federal aid to state and local governments."

"The U.S. economy shrank in the third quarter at a 0.5 percent annual pace as the now year-old recession intensified. The contraction in gross domestic product from July through September, which matched the median forecast in a Bloomberg News survey, was the worst since 2001, according to revised figures from the Commerce Department today in Washington. Consumer spending fell the most in almost three decades."

"CIT Group Inc., the commercial lender that ran short of cash this year, rose as much as 7.7 percent in New York trading after winning preliminary approval for a $2.33 billion infusion from the U.S. Treasury. The lender gained 20 cents, or 4.8 percent, to $4.38 at 9:33 a.m. today in New York Stock Exchange composite trading. Late yesterday, CIT said the Federal Reserve would allow the New York-based firm to become a bank holding company, making it eligible for funds from the Treasury’s Troubled Asset Relief Program. CIT ranked last year as the biggest U.S. independent commercial finance company."

Friday, December 19, 2008

"An estimated 32,163 new and resale houses and condos were sold statewide last month. That was down 24.0 percent from 42,293 in October and up 25.7 percent from 25,578 for November last year. Sales have increased on a year-over-year basis the last five months. California sales for the month of November have varied from last year's low to a peak of 60,326 in 2004, the average is 40,592. MDA DataQuick's statistics go back to 1988."

"Democratic lawmakers on Thursday pushed through an $18 billion package of cuts and tax increases to reduce California's burgeoning budget deficit, but Gov. Arnold Schwarzenegger said it didn't go far enough and immediately said he would not sign it."

"Mortgage rates tumbled to historic lows this week after the Federal Reserve signaled a willingness to reduce lending rates and spend billions of dollars to jump-start the housing market. That's triggered a rush among homeowners to refinance - potentially putting thousands of dollars a year into many consumers' pockets, money that could find its way into the general economy. The lower rates are expected to continue, which could spur fence-sitters to buy homes next year."

"U.S. House Financial Services Committee Chairman Barney Frank said Congress will release $350 billion from the bank-rescue package after lawmakers, President- elect Barack Obama and Treasury Secretary Henry Paulson agree to provide foreclosure relief and aid to automakers. Frank, a Massachusetts Democrat, said he plans to introduce legislation with Senate Banking Committee Chairman Christopher Dodd to release remaining funds in the $700 billion package next month. The bill will include homeowner help and short-term loans for General Motors Corp. and Chrysler LLC, Frank said in a telephone interview today."

"Secretary of Housing and Urban Development Steve Preston said the centerpiece of the federal government's effort to help struggling homeowners has been a failure and he's blaming Congress. The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview."

Thursday, December 18, 2008

"The median price paid for all new and resale houses and condos combined in the nine-county Bay Area fell to $350,000 last month. That was down 6.7 percent from $375,000 in October and down a record 44.4 percent from $629,000 in November 2007, according to MDA DataQuick, a San Diego-based real estate information service."

"The level of commercial/multifamily mortgage debt outstanding decreased slightly by 0.1 percent in the third quarter, to $3.44 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data."

"Beset by falling prices, foreclosure sales and a credit crunch, California real estate underwent a turbulent year in 2008, according to the California Association of Realtors' annual report on the state's housing market released on Wednesday. Based on a survey of 747 Realtors statewide, the report provided an on-the-ground look at how the market fared. Not surprisingly, much of it was grim. While some specific numbers differed from those tracked by other reports, the overall trend of downward momentum was clear."

"Despite the positive effect California's Senate Bill 1137 had on reducing foreclosures during September and October, its impact clearly fizzled during November, as significant increases in foreclosure activity gripped the state. According to data tracked by ForeclosureRadar.com, notice of default filings -- which mark the beginning of the home foreclosure process -- jumped 28 percent statewide from October to November, to 21,557 filings."

"Lennar Corp., a U.S. home construction company that builds in 14 states, reported its seventh straight quarterly loss as mounting job losses and record foreclosures cut demand. The fiscal fourth-quarter net loss narrowed to $811 million, or $5.12 a share, from $1.25 billion, or $7.92, a year earlier, Miami-based Lennar said today in a statement. The loss, which included a tax-related charge of $4.61 a share, was higher than the average estimate of $1.64 a share projected by 14 analysts in a Bloomberg survey."

"The Federal Reserve said it will buy Fannie Mae, Freddie Mac and Federal Home Loan Bank debt for a second time this week, doubling the pace of the central bank’s purchases under a program aimed at reducing mortgage costs. The central bank today bought $2.4 billion of the debt and will seek to buy more bonds tomorrow at 10:30 a.m., according to the New York Fed’s Web site. Dealers offered $4.4 billion of the securities today. The central bank has bought $10.4 billion of so-called agency debt since the program began three weeks ago."

"Steve Preston, the secretary of Housing and Urban Development, said the government’s central plan to help homeowners avoid foreclosure is a failure, reports the Washington Post. He blames Congress. HUD’s Hope for Homeowners program was supposed to help 400,000 borrowers. But only 312 people have applied since it was launched in October. Preston said it is too expensive and onerous for lenders and borrowers"

"The latest O.C. homes-for-sale inventory report from Steve Thomas at Altera Real Estate in Aliso Viejo suggest that Fountatin Valley’s recently been the easiest town to sell a home in, as it has an owner’s most favorable mix of buyers and sellers. As of last Thursday, Fountain Valley led the county with the best 'market time' — that’s Thomas’ benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made."

"Banks in California are not keeping their reserves in line with the rising number of bad loans on their books, the Federal Deposit Insurance Corp. reported Wednesday. Considering the ongoing housing slump and national recession, one would expect the opposite. In the third quarter, 312 banks insured by the FDIC had a median 2.27% delinquent loans (at least one month late), up from 1.59% in Q2 and 0.54% a year ago."

Wednesday, December 17, 2008

"Lawrence Yun, NAR chief economist, said there are serious structural problems in commercial lending. 'Although access to residential mortgages has improved, the opposite is true for commercial loans,' he said. 'We need liquidity for commercial mortgage-backed securities not only to free the market, but also to rollover existing debt. At the same time, the loss of jobs has had a significant impact on the demand for commercial space.'"

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 12, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 841.4, an increase of 2.9 percent on a seasonally adjusted basis from 817.7 one week earlier, which was revised from 796.8.* On an unadjusted basis, the Index increased 2.9 percent compared with the previous week and was up 37.3 percent compared with the same week one year earlier."

"Sales generally improved over last year in all parts of the state, with significant price declines leading to sharp increases in the Central Valley and Southern California. Sales of existing detached homes hit bottom in the last quarter of 2007, and have since risen in year to year comparisons. Following two years of steep declines exceeding 20 percent, annual sales in the California housing market are expected to increase 12 percent to 395,600 in 2008, with a further 12.5 percent annual increase projected for 2009. The increase in sales is largely attributed to the growth in the absorption of distressed properties with mark-downs in prices."

"American International Group Inc., which already has suffered more than $60 billion in writedowns and losses, may have to absorb almost $30 billion more because of flaws in the way its holdings are valued."

"Losses and writedowns from the credit crisis surpassed $1 trillion today, and show little sign of ending, as Morgan Stanley marked down the value of mortgages and leveraged loans. Morgan Stanley and Goldman Sachs Group Inc.’s markdowns this week bring losses by financial firms in the U.S. to $678 billion since last year, while European banks and insurers have written down a further $300 billion, according to data compiled by Bloomberg. Firms have raised about $928 billion to replenish capital, and cut about 239,000 jobs across the industry."

"For all their efforts to liquefy credit markets, the Federal Reserve and the Treasury show no signs of ending the 18-month freeze, as evidenced by the unprecedented gap between what banks and the U.S. government pay to borrow money."

"The dollar declined the most against the euro since the 15-nation currency’s 1999 debut and sank to a 13-year low versus the yen as near-zero interest rates and rising budget deficits led traders to abandon the greenback. The greenback extended its drop against a gauge of currencies of six U.S. trading partners, falling 11 percent from a 2 1/2-year high reached Nov. 21. Investors including hedge funds reversed bets that the dollar will appreciate to minimize losses as the end of the year approached, traders said."

"Macy’s Inc., the second-largest U.S. department-store company, jumped the most in almost 17 years in New York trading after it negotiated a more flexible bank-credit agreement to remove doubts about its ability to pay off $950 million in debt maturing next year. The size of the $2 billion credit facility, led by Bank of America Corp. and JPMorgan Chase & Co., and the maturity date of Aug. 31, 2012, are unchanged, Macy’s said today in a statement. The facility remains untapped, the Cincinnati-based company said"

"TransUnion, one of the big three credit bureaus, reports that delinquencies rose in the third quarter on homes and cars in Orange County but remained flat on credit cards. The ratio of home loans 60-days past due climbed to 4.6% in September, up from 3.9% in June and 1.8% a year ago."

"Southern California annual rent hikes appear to be settling in at the mid-4% range, based on the U.S. Bureau of Labor Statistics latest consumer price index. The area saw rents increase 4.3% between November 2007 and last month, down from 4.4% in September and October. A year ago in November, rents were rising at a 6% annual pace."

Tuesday, December 16, 2008

"Indicating that the ongoing decline in housing and the economy is accelerating, starts and permits for new housing construction fell by double digits to new record lows in November, according to U.S. Commerce Department figures released today. Commerce reported an 18.9 percent decline in total housing starts to a seasonally adjusted annual rate of 625,000 units and a 15.6 percent decline in permit issuance to 616,000 units for the month"

"Bay Area homes sold at their fastest pace in 17 months in October as buyers favored more affordable inland areas where depreciation and foreclosures have hit hardest. As a result, the median sale price continued its steep, months-long decline, falling a record 40.6 percent, or $256,000, from a year ago, a real estate information service reported"

"The Federal Reserve may today reduce its main interest rate to the lowest level on record and prepare for one of the boldest experiments in its 94-year history: using its balance sheet as the key tool for monetary policy. The Fed’s Open Market Committee will probably cut the benchmark rate in half, to 0.5 percent, according to the median of 84 forecasts in a Bloomberg News survey. The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets."

"American International Group Inc. Chief Executive Officer Edward Liddy may face a congressional hearing to explain 'the full extent' of the insurer’s plan to give bonuses to as many as 7,000 people so they won’t quit"

"Ronald Ferguson, the former chief executive of General Reinsurance Corp., was sentenced to two years in prison for helping American International Group Inc. deceive shareholders, avoiding a potential life term. Ferguson, 66, was the highest-ranking of five executives convicted for using a sham transaction in 2000 to help AIG improve its balance sheet. U.S. District Judge Christopher Droney also ordered Ferguson to pay a $200,000 fine and serve two years of supervised release after prison. The judge could have given Ferguson a life sentence after ruling earlier that the fraud cost AIG shareholders as much as $597 million."Orange County Register - "O.C. home seizures in free-fall" (12-16-08)"Banks last month took 633 homes in Orange County from delinquent borrowers, a 14% drop from October and the lowest monthly foreclosure total in a year. Still, foreclosures were up 74% from 364 homes taken in November ‘07. Of course, last month’s total was close to the peak at the end of the slump in the ’90s: 674 foreclosures in October ‘96"

Realty Times - "Condo Trends: Wine Country Hot for Condos" (12-16-08)"Condo sales in the nine-county area surrounding the San Francisco Bay are shooting through the roof, ranging from sales increases of 2.7 (San Mateo) to 188 percent (Sonoma). The Marin Independent Journal reports the upward swing of each county year over year for the month of September 2008. The driving force is the downward spiral of prices over the last year in the region."Realty Times - "Real Estate Outlook: Affordability Dramatically Improved" (12-16-08)

"How you see the real estate market at the moment depends on what parts you look at. If you focus primarily on mortgage rates and core affordability measures, you may see the country in a recession, but there are some very positive forces at work in the housing sector. On the other hand, if you look at widespread employment losses -- 530,000 last month alone -- along with rising personal and business bankruptcies, mortgage delinquencies and foreclosures at levels not seen since the 1930's, you might ask: How can housing rebound if the overall economy is mired in such a mess?"

Monday, December 15, 2008

"Builder confidence in the market for newly built single-family homes held at a record low in December as deepening economic turmoil, a deteriorating job market, and an ongoing flow of foreclosed homes onto the market continued to negatively impact sales conditions. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) did not budge this month from November’s all-time low reading of 9, with two out of three component indexes losing further ground."

"A federal mortgage interest buy-down program would help spark the housing market, the National Association of Realtors® said in a letter sent today to James B. Lockhart, chairman of the Oversight Board of the Federal Housing Finance Agency. NAR seeks a 4.5 percent mortgage interest rate buy-down program financed through the U.S. Treasury Department’s Troubled Asset Relief Program"

"The pace of home sales at California new-home communities was extraordinarily bad in October, primarily due to the global credit crisis, the California Building Industry Association reported today. CBIA officials said the extremely low sales rate should prompt quick action by policy makers for actions to help jump-start the critically important homebuilding industry"

"Supervisors on Wednesday are expected to approve a new rental housing registration and inspection ordinance. Unlike Rancho Cordova and Sacramento, the county will leave landlords and property owners to assess themselves and ensure that tenants aren't forced to live in substandard conditions. Housing advocates say the move is a step in the right direction, but that it's the first of many toward stronger regulation of rental housing."

"Research conducted by Zillow, a company that provides online real estate values and other information, found that U.S. home values will plunge a total of $2 trillion this year. Home values dropped 8.4 percent year-over-year in the first three quarters of 2008 compared to the same period last year, Zillow reported today, for a total nationwide home-value loss of $1.9 trillion."

"Fannie Mae, the battered mortgage giant, has agreed to act as an interim landlord for thousands of tenants living in foreclosed homes around the country. Fannie will sign new leases for the approximately 4,000 renters in its foreclosed properties, said spokesman Brian Faith. These tenants would otherwise face eviction, even if they had been paying their rent on time, because of the owners' failure to pay the mortgage on the property"

"Only houses priced under $400,000 increased in sales from a year ago.Still, price declines appeared to be very real. The median price per square foot, which adjusts for the size of the house, also tumbled ---- falling by 8 percent in just one month and down 30 percent from last year. Such a dive in prices set records in the four-year-old survey for biggest drops in median price and median price per square foot. It was also the first time in the history of the report, known as HomeDex, that the median price per square foot dipped below $200, declining to $196."

"This was the year the global economy fell apart. Next year may not be that much better, as policy makers try to put the pieces back together. All the bulwarks crumbled: Investment banks went bust and credit evaporated. U.S. consumer spending crashed, pushing Detroit automakers to the brink of bankruptcy. And growth in China and other emerging markets nosedived. The damage is so immense and widespread, the most central banks and governments can hope for next year may be to stop the deterioration and set the stage for recovery in 2010. Failure may heighten the danger of deflation and near-depression."

"Talks with the lenders who hold the mortgages on the Fashion Show and the Palazzo properties are continuing, the Chicago-based company said today in a statement. General Growth lost 96 percent of its value this year on investor concern that it is carrying too much debt amid a global credit crisis that has decimated consumer spending and reduced real estate values. The company had $25 billion of mortgages, notes and loans as of Sept. 30."

"To battle the worst financial crisis since the 1930s, Fed Chairman Ben Bernanke and his colleagues already have ratcheted down their main lever for influencing the economy — the federal funds rate — to 1 percent, a level seen only once before in the last half-century."

"In a fractional reserve banking system, where banks take your deposits to make loans, your money is gone the instant it’s deposited. You give money to the bank because they pay you interest on your deposit. Banks in turn hand your hard-earned cash to borrowers. The bank makes money by paying you a lower interest rate on your funds than it receives from those to whom your funds are lent. 'Net interest margin' this is called. If your money is gone the instant you put it in a bank, why do we all keep doing it? How does the banking system continue to function? Because we all trust that, in general, the banks will make good loans that will be paid back. That’s what they get paid for after all: to judge credit risk. All of us with savings would like to make a return on those savings. There’s nothing wrong with that. Since we don’t know how to lend money, we hire professional lenders to do it for us. But in the age of structured finance and securitization, banks thought they were passing off credit risk to investors, so they stopped measuring it."

"Bernanke wants rates low to try to stimulate economic activity and has even broached the idea of long bond purchases to keep yields on the long end of the curve down. But the poster child of deflation and low interest rates is Japan, which due to its high savings rate, was not dependent on external funding. The US should want the dollar cheaper to boost exports, but that risks the ire of our creditors, who would take big losses on their FX reserves (many economists argue this idea is specious, but try explaining the loss in paper wealth to a populace not schooled in such niceties. FX losses, when the dollar was weakening earlier in the year, produced a lot of ire in China, including among bureaucrats). Similarly, even if you subscribe to the deflation outlook, 3%ish 30 year bonds is a pretty risky bet independent of the currency risk. So it looks like our friendly funding sources are likely to get burned one way or another, perhaps both."

"The median price of a single-family home in San Francisco fell 16.6 percent to $702,000 in October, the most recent month for which data are available, according to the real estate information service MDA DataQuick. The October drop compares with $842,000 in October 2007. The median price is now 22 percent below its peak of $900,000 in May 2007."

Friday, December 12, 2008

"U.S. households, hit by declining home values and stock market losses, have cut back on their debt levels for the first time on record as loans remain scarce amid what appears to be a deepening recession."

"The Federal Reserve refused a request by Bloomberg News to disclose the recipients of more than $2 trillion of emergency loans from U.S. taxpayers and the assets the central bank is accepting as collateral."

"Speaker Nancy Pelosi said the U.S. House is likely to act next month on a $500 billion to $600 billion economic-stimulus measure aimed at making long-term investments in renewable energy as well as providing a short- term boost for the economy."

"Bernard Madoff confessed to employees this week that his investment advisory business was 'a giant Ponzi scheme' that cost clients $50 billion before two FBI agents showed up yesterday morning at his Manhattan apartment."

"Citigroup Center joins a long line of iconic midtown skyscrapers from the RCA building to the Pan Am tower that have been given new identities as their namesake companies were bought, sold or failed. In Citi’s case, the bank, which is firing 52,000 workers worldwide, hasn’t owned the 59-story building for seven years and occupies three floors, according to property data service CoStar Group Inc. It had 18 floors in 2001."

"The number of Americans filing first- time claims for unemployment benefits surged more than forecast last week to a 26-year high, a sign companies are stepping up firings as the recession deepens. Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982, from a revised 515,000 the previous week, the Labor Department said today in Washington. The number of workers staying on benefit rolls reached 4.429 million, also the most since 1982."

"Latest home-selling stats from DataQuick show for the 22 business days ended Nov. 21 show that O.C. homebuying runs +50.8% vs. a year ago as median selling price is -28.7% vs. a year ago. November will likely have been the fifth straight month of year-to-year sales gain after 33 months of slumping homebuying."

"Realtor prognosticator Gary Watts and others in the industry laughed at the Chapman forecast in 2005 for projecting a 6.1% drop in the median house price. Instead, the median price soared 16.5% that year. Now, the latest report by the A. Gary Anderson Center for Economic Research states that its economists were accurate after all."

"James Lockhart, whose agency oversees government-controlled mortgage giants Fannie Mae and Freddie Mac, made the comments at a meeting of Women in Housing & Finance, an industry group. He did not say how long it would take to achieve such a drop and has declined to provide a firm target for mortgage rates. Treasury Department officials have been considering a program to lower mortgage rates, which would not apply to refinanced loans. Real estate agents and builders have been lobbying intensely in Washington for government efforts to spur home sales amid a severe decline in the U.S. housing market."

"UrbanAmerica LP, a property investor focused on urban areas, bought 13 office buildings and one distribution center in cities across the U.S. for $485 million from Rubicon America Trust of Australia. The properties are almost entirely leased to U.S. government agencies and are located in cities including Washington, Philadelphia, Boston, Houston, Denver, San Diego and Huntsville, Alabama. They have 3.1 million square feet (288,000 square meters) of space, New York-based UrbanAmerica said today."

"Records involving Fannie Mae, the largest source of U.S. home-loan money, were subpoenaed by a federal grand jury as part of a criminal investigation into claims made in a $7 billion civil lawsuit against the company."

"Bank of America Corp., the third- largest U.S. bank, said it plans to cut 30,000 to 35,000 positions over the next three years because of its acquisition of Merrill Lynch & Co. and the weak economic environment."

"Based on Wednesday’s pay window traffic and the amount collected in checks (roughly $90 million), Tax Collector expects to 'approach last year’s collection total.' That’s not good because total tax bills grew 4% vs. a year ago. And last year had worst lateness rate since 1992."

"Yes, your eyes aren’t foggy. Economists from Global Insight and National City say their real estate math machines saw Orange County housing 'fairly valued' in third-quarter as values ran 13.2% below what — theorhetically — local homes should sell for. Global Insight/National City economists track home valuation nationwide by mixing pricing data with interest rate, income and other demographics data. And for the third-consecutive quarter, this pair’s concluded that O.C. homes sell for less than the assumed true value — this time by the largest undervaluation margin since 2001’s fourth quarter, just after the 9/11 terror attacks. See chart. Click on it to see larger version."

Wednesday, December 10, 2008

"Fix Housing First, which consists of more than 600 organizations, home building companies and manufacturers continues to add new members on a daily basis, is pressing for a major stimulus package to stem the decline in home values, stabilize financial markets and reignite consumer demand. To get the economy moving again, the coalition is urging Congress to support enhancements to the home buyer tax credit and provide below-market 30-year fixed-rate mortgages for home purchases."

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 5, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 796.8, a decrease of 7.1 percent on a seasonally adjusted basis from 857.7 one week earlier. On an unadjusted basis, the Index increased 32.7 percent compared with the previous week and was up 2.2 percent compared with the same week one year earlier. Most categories of the survey declined from the previous week’s results, which were adjusted to account for the shortened week due to the Thanksgiving holiday."

"Investors in money-market mutual funds that focus on U.S. Treasuries may lose money for the first time if the Federal Reserve cuts interest rates next week and yields become too small to cover expenses."

"Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are considering forgoing new appraisals on refinanced loans to help struggling homeowners, their regulator said."

"An oversight committee set up by Congress criticized the U.S. Treasury for not using the $700 billion financial bailout to help average Americans, and questioned its commitment to stem home foreclosures. The panel, which met for the first time about two weeks ago, issued a report faulting the department for not having a comprehensive plan for stabilizing financial markets and urging it to more clearly explain its efforts. The group’s chairwoman, Harvard Law Professor Elizabeth Warren, is scheduled to testify before the House Financial Services Committee today."

"JPMorgan Chase & Co. plans to contribute $400,000 to Chicago’s Republic Windows & Doors LLC, where employees are staging a sit-in to protest the plant’s closing, U.S. Representative Luis Gutierrez said today. JPMorgan, which owns 40 percent of Republic through its Chase Capital Partners investment unit, pledged the money 'for the exclusive benefit of the plant’s workers,' Gutierrez said in a statement posted on his Web site. Thomas Kelly, a spokesman for the New York-based bank, declined to confirm the release."

"American Land Lease Inc., an owner and developer of manufactured home communities, surged in New York trading after private equity firm Green Courte Partners LLC agreed to buy the company for about $438 million."

"Deadline Day! First installment of the 2008-09 property taxes are due today. And if you haven’t paid yet — you are not alone! According the the O.C. Tax Collector, with two days remaining before the deadline, collections this season were $1.67 billion — $145 million less than a year ago, or an 8% shortfall."

"U.S. Bank plans to keep the branches and retail employees it got last month when it acquired Newport Beach-based Downey Savings and Loan after it was seized by the FDIC, said Steve Dale, a spokesman for U.S. Bank."

Tuesday, December 09, 2008

"With our builders and other members of the housing industry confronting the most serious recession in more than 50 years, we are announcing today that NAHB is cutting $11.5 million from its operating budget to ensure that NAHB remains the premier advocacy and service trade association for the residential construction industry"

"The Pending Home Sales Index,¹ a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September, and is 1.0 percent below October 2007 when it was 89.8."

"Delinquency rates continued to tick up in the third quarter for most commercial/multifamily mortgage investor groups, but remained at the lower end of their historical ranges, according the third quarter Commercial/Multifamily Delinquency Report from the Mortgage Bankers Association (MBA). "

"More than half of all homeowners who had their loans modified to make the payments more affordable in the first half of the year are already in default again, banking regulators said Monday. The new data raise questions about whether government money may be better spent on creating jobs, rather than averting foreclosures, said John Reich, director of the federal Office of Thrift Supervision at a housing industry forum sponsored by his agency."

"E-mails and other internal documents released by the House Oversight and Government Reform Committee show that former Fannie Mae CEO Daniel Mudd and former Freddie Mac CEO Richard Syron disregarded recommendations that they stay away from riskier types of loans."

"Most U.S. mortgages modified in a voluntary effort to keep struggling borrowers in their homes and stem foreclosures fell back into delinquency within six months, the chief regulator of national banks said. Almost 53 percent of borrowers whose loans were modified in the first quarter were more than 30 days overdue by the third quarter, John Dugan, head of the Treasury Department’s Office of the Comptroller of the Currency, said today at a housing conference in Washington."

"President-elect Barack Obama is focusing his economic recovery strategy on making the biggest investment in the nation’s infrastructure since President Dwight D. Eisenhower created the interstate highway system a half- century ago."

"In the year ended in October, O.C. home values fell by 18.1% — largest annual loss in the study’s history. By appraiser math, local house values are 24% off their October 2006 peak. DataQuick, as a comparison, has home values 35% off a June 2007 peak."

"John Dugan, the nation’s Comptroller of the Currency, said today that more than half of loans modified in the first quarter of 2008 fell delinquent within six months. In other words, after lenders helped struggling borrowers by lowering interest rates, postponing principal payments, extending loan terms or reducing principal owed, homeowners started missing payments again."

"The OCC data reflects actions taken by the 14 largest national banks and thrifts, which together represent 60% of the mortgage industry. Nearly 36% of borrowers were more than 30 days past due on the loan payment three months after their loan was modified and nearly 53% were more than 30 days late after six months, according to the OCC. The high redefault rate raises questions about the effectiveness of current efforts to work with troubled borrowers and comes at time when the federal government is facing increased pressure to do more to reduce foreclosures."

"The 15-year FRM this week averaged 5.33 percent with an average 0.7 point, down from last week when it averaged 5.74 percent. A year ago at this time, the 15-year FRM averaged 5.65 percent. The 15-year FRM has not been since March 20, 2008, when it averaged 5.27 percent."

"Internal Freddie Mac budget records show $11.7 million was paid to 52 outside lobbyists and consultants in 2006. Power brokers such as former House Speaker Newt Gingrich were recruited with six-figure contracts."

"Under the Treasury's latest proposal, the government would invest tens of billions of dollars to help lower the interest rate on 30-year mortgages to just 4.5 percent, which would be the lowest rate since the early 1960s. "

"Knowing that housing prices in Stockton and Santa Rosa have been on the decline for about twice as long as Alameda and San Francisco, it probably shouldn’t be a surprise that they’ve also fallen much further from peak levels to current (as of Nov’08). Indeed, Santa Rosa and Stockton have fallen 44% and 59% respectively, while Alameda and San Francisco “only” 18% to 24% - and many neighborhoods in the heart of San Francisco have fallen much less or even posted modest increases."

Friday, December 05, 2008

"The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.99 percent of all loans outstanding at the end of the third quarter of 2008, up 58 basis points from the second quarter of 2008, and up 140 basis points from one year ago on a seasonally adjusted basis, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey."

"Owners of condominiums sold under a San Francisco affordable-housing program decades ago are balking at new rules that would limit the homes' resale price and restrict whether they could be rented or inherited. Approximately 550 units remain under the program that ran for about a decade until 1988. It required apartment building owners who wanted to convert their properties to condominiums to sell some percentage of their lower-priced rental units at below-market prices."

"An alarming half-million American jobs vanished virtually in a flash last month, the worst mass layoffs in over a third of a century, as economic carnage spread ever faster and the nation hurtled toward what could be the hardest hard times since the Great Depression."

"Realtor Magazine, a publication of the National Association of Realtors on Thursday reported on a fraud scheme in which individuals have attempted to purchase real estate and vehicles using bogus documents. The fraudulent documents reportedly have the name of U.S. Treasury Secretary Henry Paulson on them, though a savings bond is the only hard-copy bond issued by Treasury that a citizen can purchase."

"Federal Reserve officials are throwing everything they have into the fight to stabilize financial markets and restore economic growth. In the process, the Fed balance sheet is ballooning to $3 trillion, if not more. It's a risky approach because all the cash piling up in the banking system might spark rising inflation down the road. The alternative -- just relying on traditional interest-rate cuts -- might leave markets and the economy mired in the mud for years."

"Bank of America Corp. Chief Executive Officer Kenneth Lewis’s takeover of Merrill Lynch & Co., the capstone of more than $100 billion in acquisitions he’s made since 2001, may prove the hardest to digest. Lewis, 61, called Merrill 'the ideal long-term fit' when the deal was announced on Sept. 14. He will generate fees from Merrill’s 16,850-strong sales force and says he can slash $7 billion of costs with the combination, approved by shareholders of both firms today and likely to close by the end of the month. The firm’s $2.8 trillion of assets would vault it over Citigroup Inc. and JPMorgan Chase & Co. as the No. 1 U.S. bank."

"A new report suggests that homes are no longer overpriced in the vast majority of markets, but concludes prices will continue to fall in areas hard hit by foreclosures -- in many cases overshooting market fundamentals on their way down. IHS Global Insight's quarterly report, House Prices in America, looks at historical home-price-to-income ratios in 330 metro areas. The latest report concludes that homes were fairly valued in all but 33 of those markets at the end of September."

Thursday, December 04, 2008

"The National Association of Realtors® has been advocating a four-point plan to help stimulate and stabilize the housing market and the overall economy. Part of the plan calls for changes in how the Treasury uses TARP funds and other monies to lower mortgage interest rates. We are pleased to see that the leadership of the Treasury Department is seriously considering the actions we discussed to lower interest rates. The result of such action will help the nation’s economic recovery and bring stability to the housing market."

"Last month, consumers filed a combined 852 Chapter 7 and Chapter 13 bankruptcies in the U.S. Bankruptcy Court in Santa Ana, according to data from the National Bankruptcy Research Center. A year ago, only 424 consumer bankruptcies were filed here."

"The U.S. economy has been in recession since December 2007, experts determined this week, with little hope for a speedy recovery as losses and defaults continue to roil housing and financial markets. Bernanke painted a grim picture of strains for homeowners. As many as 20 percent of borrowers owe more than their homes are worth, he said. Lenders appear to be on track for 2.25 million foreclosures in 2008, compared with an annual pace of 1.0 million before the crisis, he added."

"You don't have to be that smart to figure out there's still a lot of rot on Citigroup's $2.1 trillion balance sheet. If there wasn't, the New York-based lender wouldn't have needed last week's government rescue, which included a new $20 billion investment by the Treasury Department, plus a guarantee covering about $306 billion of the bank's assets against most losses."

"Revenue in fiscal 2009 will be 'significantly' below the previous year and the company may deliver only 2,000 to 3,000 homes for the period, Toll said today in a statement. That compares with the 4,743 homes it sold this year."

"Orange County is the 9th riskiest place in the country for banks to make home loans, according to First American CoreLogic’s 4th quarter rankings. The county dropped one spot from No. 8 in Q3. Falling home prices and elevated foreclosures are to blame for the county’s top-ten ranking. First American estimates O.C. house prices are dropping 21.6% annually."

"J.P. Morgan Chase & Co. seized tens of millions of dollars of collateral from a commercial-property debt fund run by Guggenheim Partners LLC and started to auction it off this week following the fund's failure to come up with additional capital to meet margin calls, according to people familiar with the matter"

Wednesday, December 03, 2008

"The Treasury Department is considering a plan to revitalize the U.S. home market that would push down interest rates for loans to purchase a home, according to people familiar with the matter. The plan, which is in the development stage, would temporarily use the clout of mortgage giants Fannie Mae and Freddie Mac to encourage banks to lend at rates as low as 4.5%, more than a full point lower than prevailing rates for standard 30-year fixed-rate mortgages."

"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 28, 2008, which was a shortened week due to the Thanksgiving holiday. The Market Composite Index, a measure of mortgage loan application volume, was 857.7, an increase of 112.1 percent on a seasonally adjusted basis from 404.4 one week earlier. On an unadjusted basis, the Index increased 51.4 percent compared with the previous week and was down 21.9 percent compared with the same week one year earlier."

"Many middle-income neighborhoods in the U.S. are suffering from home foreclosures and may fall into low-income status, Federal Reserve Governor Randall Kroszner said."

Orange County Register - "Traders see LA/OC home prices falling 18% more" (12-3-08)"Traders making commodity-like bets on future home pricing are sticking to a harsh outlook that the LA/OC market will be further smacked by losses through November ‘09."

"JPMorgan on Monday gave 60-day notice to 250 employees in and around the Irvine office campus of Washington Mutual and asked 321 to stay on temporarily as part of a transition team. Those who stay on temporarily, possibly until late 2009, will get double pay, said Gary Kishner, a company spokesman. He said 1,350 employees will remain in Orange County after the cuts."

"Those hoping for a quick rebound are likely to be disappointed. Economists and other pros generally say home prices won't bottom out before the second half of 2009, and some don't see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years."

"The percentage of people who are two months behind on their mortgages shot up in the third quarter from the same period last year, according to credit reporting agency TransUnion LLC. For the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter."

"In Sacramento, Calif., the price per square foot fell 31.9 percent from September 2007 to September 2007, according to Radar Logic. San Francisco (down 31.9 percent), Phoenix (down 29.3 percent), and Los Angeles (down 27.4 percent) also were among the metro areas with the largest year-over-year price declines."

Bloomberg - "Icahn Sues Leon Black’s Realogy Over Debt Exchange" (12-2-08)"Billionaire investor Carl Icahn sued Leon Black‘s Realogy Corp. over claims the company’s planned $1.1 billion debt exchange is a fraudulent transfer of money that will only delay its inevitable failure. Icahn’s High River Limited Partnership, owner of Realogy’s so-called pay-in-kind toggle bonds, said it will be unfairly pushed behind other noteholders in the exchange. Realogy, the Parsippany, New Jersey-based owner of Coldwell Banker and Century 21 brands, is asking bondholders to swap the securities for new debt at a discount as it battles the worst housing crisis since the Great Depression."

"GMAC LLC, the auto and home lender that’s been shut out of some credit markets, may end operations at a commercial paper unit. GMAC has until Dec. 24 to secure upgrades from ratings firms on securities at its New Center Asset Trust unit, before an “orderly wind-down” may begin, the Detroit-based company said today in a regulatory filing. GMAC still plans on using the facility to sell commercial paper to the Federal Reserve as part of a government plan to unlock credit markets."

Bloomberg - "Beazer Shares Drop on Report of Eighth Straight Loss" (12-2-08)"Beazer Homes USA Inc., the U.S. homebuilder under investigation by the Justice Department, fell 8 percent in New York trading after the company reported a loss five times larger than analysts had projected. The fiscal fourth-quarter net loss widened on higher tax charges to $473.9 million, or $12.29 a share, from $155.2 million, or $4.03, a year earlier, the Atlanta-based company said today in a statement. Shares dropped 12 cents to $1.38 in New York Stock Exchange composite trading."

About Me

Bruce Norris is an active investor, hard money lender, and real estate educator with over 30 years experience. Bruce has been involved in over 2,000 real estate transactions as a buyer, seller, builder and money partner.

Renowned for his ability to forecast long-term real estate market trends and timing, the release of TheCalifornia Comeback in 1997 gained him much notoriety and its accuracy of the extensive report led many California investors to financial freedom. His January 2006 release, The California Crash, is an in-depth look into the California market correction and the statistics behind Bruce’s predictions. His latest award winning report, Category 5, goes into great detail why Bruce isn’t ready to call California Comeback 2 and what the real estate community should expect in the coming two years as the market continues its correction.

Bruce speaks and debates throughout California and has been a guest speaker at the California Builders Industry Association, California Association of Mortgage Bankers, The Financial Executives Networking Group, the Southern California Appraisal Institute, the Apartment Owners Association, the Real Estate Research Council, numerous California Realtor associations, the local Chamber of Commerce, and several local and national investment clubs. In late summer of 2008, Bruce hosted the I Survived Real Estate 2008 fundraiser bringing together top industry segment leaders to discuss the current state of California real estate market which benefited the Susan. G. Komen for the Cure Foundation.

Bruce is host of The Norris Group Real Estate Radio Show on KTIE 590am where he interviews real estate industry leaders and economists. Guests have included Frank Nothaft with Freddie Mac, Peter Schiff of Euro Pacific Capital, Leslie Appleton-Young and Joel Singer with C.A.R., Alan Nevin with the CBIA, RealtyTrac, PIMCO, PMI Group, REDC, HUD, the National Auctioneers Association, and the Center for Responsible Lending to name a few. For a complete list of past guests, visit the website at www.TheNorrisGroup.com. The show won a Platinum Hermes Creative Award in 2009.

Bruce has contributed articles to many real estate magazines and newsletters including RealtyTrac’s Foreclosure Newsletter, The Business Press, Creative Real Estate Magazine, The Orange County Register, AOA Magazine, and the Daily Commerce. He has also been featured in The Wall Street Journal, Fox Business News, The New York Times, Good Morning America, the Los Angeles Times, Fortune,Mortgage Banker Magazine, Money Magazine, Reuters, Associated Press, The Orange County Register, The Tribune, and numerous others.